Brisbane, Australia-based cryptocurrency exchange Digital Surge has suspended more than 30,000 user accounts after being caught in the downturn of FTX. Then the Brisbane-based cryptocurrency broker entered voluntary management. Here are the details…
30,000 crypto users’ accounts frozen
Digital Surge froze the trading accounts of its 30,000 customers last month. This meant that people with money at the broker would not be able to access their funds. Now, a month later, the Brisbane-based cryptocurrency broker has entered voluntary management. Voluntary management is often something a company does when it is at risk of or already in bankruptcy. Troubles by Digital Surge are tied to the collapse of global crypto exchange FTX. As we have reported as Kriptokoin.com, FTX has filed for bankruptcy as a result of liquidity crunch.
The company, which once advertised stars like Larry David and Tom Brady, declared bankruptcy in early November after disclosures about its business practices led to an influx of funds by customers. The new CEO appointed to the collapsing crypto exchange says he has “never seen such a failure in terms of corporate control.”
What are the managers saying?
Digital Surge has yet to disclose how much of its customers’ cash was lost in the FTX crash. Last month, “Digital Surge announced that it always maintains a 1:1 reserve for all user deposits. However, the amount of FTX exposure is no longer known.” Digital Surge promoted the platform as an “effortless” way to invest in crypto, including its self-directed super funds (SMSF).
SMSFs allow clients to invest their retirement savings in products of their choice, from property, stocks and bonds to the volatile crypto market, rather than relying on a super fund to make them for them. Dan Rutter, CEO of Digital Surge, said executives would make “a payment in excess of $1 million” if creditors decide to bail out the company. It also wrote that “profits from Digital Surge will be applied to customer balances over the next five years.”
On the other hand, Scott Langdon, the former manager of the exchange, said that the priority is customers. He explained that he appreciated the new management taking responsibility in the current uncertainty. He emphasized that they will act proactively and be in contact with customers. He also stated that they will provide information about the practices of the new administration.
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